59.85 F
June 22, 2024
PI Global Investments
Hedge Funds

Hedge funds owners may consider drastic measures as Orchestra BioMed Holdings, Inc.’s (NASDAQ:OBIO) recent US$60m drop adds to long-term losses

Key Insights

  • Institutions’ substantial holdings in Orchestra BioMed Holdings implies that they have significant influence over the company’s share price
  • A total of 3 investors have a majority stake in the company with 51% ownership
  • Using data from analyst forecasts alongside ownership research, one can better assess the future performance of a company

Every investor in Orchestra BioMed Holdings, Inc. (NASDAQ:OBIO) should be aware of the most powerful shareholder groups. We can see that hedge funds own the lion’s share in the company with 28% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, hedge funds investors endured the highest losses last week after market cap fell by US$60m. Needless to say, the recent loss which further adds to the one-year loss to shareholders of 26% might not go down well especially with this category of shareholders. Generally speaking, hedge funds are quite aggressively managed, and are usually looking to maximize short-term returns. Given their high ownership in Orchestra BioMed Holdings, they wield significant power and continued under performance can lead to them influencing management decisions which might not be evaluating the company’s long-term prospects.

Let’s take a closer look to see what the different types of shareholders can tell us about Orchestra BioMed Holdings.

Check out our latest analysis for Orchestra BioMed Holdings

NasdaqGM:OBIO Ownership Breakdown January 8th 2024

What Does The Institutional Ownership Tell Us About Orchestra BioMed Holdings?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

As you can see, institutional investors have a fair amount of stake in Orchestra BioMed Holdings. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Orchestra BioMed Holdings, (below). Of course, keep in mind that there are other factors to consider, too.

NasdaqGM:OBIO Earnings and Revenue Growth January 8th 2024

Our data indicates that hedge funds own 28% of Orchestra BioMed Holdings. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. The company’s largest shareholder is RTW Investments, LP, with ownership of 28%. Meanwhile, the second and third largest shareholders, hold 16% and 6.8%, of the shares outstanding, respectively. Additionally, the company’s CEO David Hochman directly holds 0.6% of the total shares outstanding.

To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Orchestra BioMed Holdings

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

We can see that insiders own shares in Orchestra BioMed Holdings, Inc.. It has a market capitalization of just US$267m, and insiders have US$4.2m worth of shares, in their own names. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.

General Public Ownership

With a 26% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Orchestra BioMed Holdings. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Equity Ownership

Private equity firms hold a 12% stake in Orchestra BioMed Holdings. This suggests they can be influential in key policy decisions. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Public Company Ownership

Public companies currently own 16% of Orchestra BioMed Holdings stock. It’s hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it’s worth watching this space for changes in ownership.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that Orchestra BioMed Holdings is showing 3 warning signs in our investment analysis , you should know about…

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.

Valuation is complex, but we’re helping make it simple.

Find out whether Orchestra BioMed Holdings is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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